An Insider Weighs In On Bluewater’s Spotify Lawsuit

Guest post by Benom Plumb, Assistant Professor of Music Industry Studies at the University of Colorado Denver

Given my background in music publishing and current work in the music industry, the Spotify news this week hit close to home for me. First, my former employer in Nashville, Bluewater Music, made national headlines this week by filing a copyright infringement lawsuit against Spotify. Second, I have close friends and colleagues at both Bluewater and Spotify. Both are great companies with great people, so I will try to tread lightly and be balanced.

Having said that, I did take the time to read the full twenty-five page legal complaint. My conclusion is that it will be a tough fight for Spotify. Then again, I typically default to wearing the “publisher hat.”

I have not spoken to any of my Bluewater or Spotify colleagues about it, and even if I had, they’d probably just say “no comment” or direct me to the document filed on July 18th. So first, here are some highlights of the complaint:

Bluewater claims 2,339 musical compositions have been infringed, 474 of which no licenses or payments have been made at all by Spotify. The remaining compositions lack valid licenses or have inaccurate royalty payments attributed to them.

Bluewater is suing Spotify for damages, legal costs and maximum copyright infringement penalties of $150,000 per composition, which would be over $350 million.

Spotify’s recent class-action settlement with publishers of $43 million really does work out to $4.00 per infringed composition, as the Bluewater complaint states. That is one reason, amongst others, Bluewater opted out of this Spotify settlement with the National Music Publishers Association

I can verify that Bluewater Music is meticulous and persistent in their licening and royalty collection work. The company would not file a lawsuit against a behemoth like Spotify unless the copyright infringement and non-payment data they have is rock solid. Bluewater has been informing Spotify of unlicensed and unpaid compositions streamed on the Spotify platform since 2011 (full disclosure, this was during my time as Vice President of Licensing there). In fact, I remember when my boss started putting together the list of songs to send to Spotify. This was essentially to say “Howdy Spotify! Welcome to the U.S.A. Here’s a list of our songs on your service that we don’t have licenses or royalties for.”

Spotify has claimed in the past that it doesn’t know who or how to pay royalties to some songwriters and publishers. This may be true in some cases. But this argument doesn’t make sense with a company like Bluewater. When a reputable publisher makes contact directly to give all the data necessary to license and pay royalties, this is helpful to Spotify and should establish better business dealings in the future between the two companies.

I’m gonna go out on a limb and say that maybe Spotify doesn’t dedicate enough resources to songwriters and publishing. Almost all of Spotify’s past efforts and publicity focus on the record labels and recording artists. That makes sense, given the platform. But that over-emphasis of resources creates problems.

The legal complaint makes clear that Bluewater rarely, if ever, got replies back from Spotify. I wouldn’t be surprised if these attempts at communication are stuck in multiple log jams of Spotify employee’s inboxes and have been totally lost in a sea of confusion for their licensing staff. The Bluewater complaint states “willful infringement” multiple times, which might be true in some cases. It could also be true that Spotify just lacks the resources to handle some aspects of publishing royalty administration.

So what’s the rub? Spotify has yet to respond, so the story is just getting warmed up. One thing is for sure, Spotify’s fight with music publishers won’t help build investor confidence in that rumored IPO, and I definitely don’t see either company backing down.

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